Yesterday saw day two of the Budget debate, with George Osborne opening for the Opposition in a chamber virtually bereft of Labour and Lib Dem MPs.

The Shadow Chancellor gave a tour-de-force with some lots of attacks on the Government and some good jokes, beginning with some teasing of his absent opposite number…

"I welcome this opportunity to begin the second full day of the Budget debate, because it gives us the opportunity to bring to the House’s attention all the things that were in the Budget but not actually mentioned in the Chancellor’s Budget speech. The debate will give us all a chance to reflect on what the rest of the country thought about the Budget — which is: not a lot — and the fact that only three Labour Back Benchers have turned up to support the Government’s final Budget suggests that the parliamentary Labour party does not think much of it either. [Interruption.] Or, indeed, the Chancellor of the Exchequer. He normally turns up, but there we go. He did not turn up for his “Today” programme interview either, so, after an empty Budget, we got an empty chair. Anyway, it is a pleasure to be debating these matters with the Secretary of State for Work and Pensions, the right hon. Member for Pontefract and Castleford (Yvette Cooper), because one thing is certainly clear. Depending on the result of the election, either she will be living in No. 11 Downing street or I will, so it is good for us to have this early debate.

"It normally takes 24 hours for people to see through these Labour Budgets, but this one disintegrated within about 24 minutes. Even before the Chancellor sat down, it was clear that he had completely failed to rise to the challenge of the times we face and the expectations of his high office. We know that the country faces a storm of economic problems. One in five young people cannot find work. Our recovery is one of the weakest in the G20, and our banking system cannot finance that recovery at the moment. Family incomes are being squeezed, and we have the largest budget deficit of any country in the developed world. Our credit rating is under threat, confidence is lacking, manufacturing is shrinking, exports are falling and business investment has collapsed. Everything cries out for urgent action, for energy, for vision, for leadership and for new ideas to get our economy moving.

"But what did we get yesterday from this exhausted, discredited Government? Absolutely nothing at all. An empty Budget. An exercise in politics, not an example of governing. The only ideas of any substance in this Budget are Conservative ideas. Taking first-time buyers out of stamp duty? Now, I knew I had heard that before, and when I did my research, it turned out that I had announced it at the Conservative party conference three years ago."

He then went on to go through a number of other measures which were either stolen from the Conservatives or attempts at imitating them, before getting on to the things that were not mentioned in the Budget statement:

"How on earth did the Chancellor think he could get away with freezing the personal tax allowances of 30 million working people, and not mention it at that Dispatch Box yesterday? One would have thought that, having watched all those Budget speeches from his predecessor, the Prime Minister, in which the stealth taxes were not mentioned and the spending was double-counted, and having seen the damage that that did to the reputation of the Treasury, he would have learned the lesson. Apparently not. Did he really think that no one would turn to page 123 of the Red Book and see what he was doing? When the allowances were frozen last autumn, retail price inflation was negative. That was the excuse that the Chancellor used for freezing the allowances. Today, retail price inflation is 3.7 per cent., yet he is going to freeze the allowances from April. That is, in effect, a tax rise for 30 million working people, and it was not even mentioned in the Budget."

"In addition, there are the tax measures on small businesses. The Chancellor said yesterday that he was going to provide “extra support to small businesses through the tax system”

"Who could complain about that? What he did not tell us was that the extra support is more than cancelled out by the other tax rises on small businesses that are in the pipeline. He told us that he was cutting business rates, but the Red Book reveals that he is expecting to raise an additional £1 billion in revenue from business rates next year.

"The Chancellor made a great fuss of doubling the small business investment allowance. The Treasury cost it at £100 million, and the Chancellor paraded it as something that he was doing for small businesses. He did not mention the fact that he is increasing the small companies tax rate at a cost to small businesses of £420 million—four times the amount that he is giving with one hand is being taken back with the other. No wonder that the response of the Federation of Small Businesses was that the Budget “will not help job creation”.

"If the small businesses of this country do not think that a Budget is going to create jobs at this point in the economic cycle when the recovery is so weak, that tells us everything about how this Budget has failed."

The missing centrepiece of the Budget, he argued, was a credible plan to deal with the deficit:

"Yes, the Chancellor confirmed that we have the worst deficit in the G7. Yes, he announced that we have the second-worst deficit in the OECD after Ireland. Did he convince anyone, however, that he was serious about dealing with the Budget deficit problem, serious about protecting our country’s credit rating, serious about avoiding the rise in gilts that mean higher interest rates in a recovery, and serious about confronting the truth that this Government have ended up borrowing one pound for every four that they spend, and that having entered office on a pledge to cut the bills of social failure, they now head for the exit door with Britain spending more on debt interest payments than it does on our entire education system? No, he did not.

"The Government seem to believe that if they say often enough that they have a credible plan, somehow fiction will become reality. But the definition of a credible plan is that someone out there believes them and thinks that it is credible. Let us look at what investors said after the Chancellor sat down yesterday. Standard Chartered called it “a do nothing Budget that had shades of Nero about it”. Citibank said there were “no proper medium-term public spending plans” and no “credible plan to return to fiscal sustainability”.

"The same rating agency that yesterday downgraded Portugal—whose deficit is half ours, by the way—came out immediately to warn that the plan was “too slow”. It is clear that the only thing holding together Britain’s reputation in the international community is the prospect of a Conservative Government who can sort this mess out."

"Like some giant fiscal doughnut, yesterday’s Budget had a gaping hole in the middle of it where there should have been a proper comprehensive spending review. If we look at table A1 in the Red Book—a table of Budget measures—there are great blank spaces where a spending review normally sits. The Government simply cannot tell us what they are planning to do in 2011–12, despite all the information and all the resources available to them. Is there anything more risible than the Government’s explanations as to why they cannot provide the spending review? They tell us that it would impossible to do this in March because of the uncertain state of the economy, but we can apparently have it in October—yet this has nothing to do with the fact that there is going to be an election in May. They really are taking the public for complete fools."

"What Ministers do not say is that they have absolutely no idea of their budgets for 2011–12, on which these efficiency savings are supposed to be based. They can produce as many efficiency reports as they like, but—quite apart from the fact that the National Audit Office found that barely a quarter of the savings promised before the last general election can be traced today—that is not a credible way to approach the current problem.

"This is what was said by the officials who were contacted by the media last night. When telephoned by a journalist, an official at the Department for Environment, Food and Rural Affairs said:

“All quite deliberately vague. We haven’t got any detail on where those savings will be gathered. We haven’t got a breakdown of the detail: it doesn’t exist.”

"Another official said:

“We certainly don’t have a list as of today. It’s a figure that we have agreed with Her Majesty’s Treasury, as part of Building Britain’s Future or whatever the slogan is that’s on our press release.”

"Another official was asked by a journalist about the £10 million corporate services reform programme. This was his reply:

“Corporate services. Christ! Let me see if I can find out what that is".

"So there we have it: the largest budget deficit in our peacetime history, and they are turning to God to help them to sort it out.

"One thing that the Government could do—I shall ask the right hon. Lady to confirm that they can do it—is publish the fiscal tables that we know exist. The Government claim that they want open and transparent debate about spending ahead of the election, so why do they not publish those tables? What are they trying to hide? If they published the tables, we could have a more serious debate about what the Government are actually planning to do."

And he concluded:

"Rather than this fiction, we should have a set of accounts telling us what the liabilities are for the banking assets that we hold, what the liabilities are for public sector pensions, what the liabilities are for the private finance initiative deals done by the Government over the past 13 years, and what the liabilities are for Network Rail. We should have a proper set of national accounts on the basis of which this Parliament and this country could discuss the country’s future. That does not exist under the current Government, but I can tell the House that it will exist under the next.

"This is what is so sad about this Budget. It presented the Government with an opportunity finally to rise to the challenge. After all, what did the Chancellor have to lose? It is obvious that he will not be in office after the election even
if Labour wins it. The forces of hell have been unleashed against him—forces of hell not too distant from the family life of the right hon. Lady. It is absolutely clear that if Labour were elected, the Prime Minister would choose a new Chancellor: the right hon. Member for Normanton (Ed Balls). The current Chancellor therefore had a unique opportunity to do what he thought was right for the country rather than what he thought was politically convenient for his party, but he completely failed to meet that challenge."